Flashy gimmicks are no substitute for scholarship

The US car industry shows why higher education deregulation is ultimately disastrous for product quality and consumer safety, says Jeff Frank

September 29, 2018
Source: istock

Some economists have occasionally made the case for removing seat belts from cars, claiming that it would lead to fewer deaths because everyone would drive more carefully.

This is an idea that most realistic economists consider a curiosum. In theory, it could happen, but no one relatively sane would propose trying the experiment. Why not also let automakers soup up the engines at the same time? Perhaps take all the decision-making away from the engineers and give it to the stylists and marketing people?

That might sound like an absurd scenario for the car industry today, but the UK’s experiment to increase English tuition fees to £9,250 and remove all student number controls can be viewed as just that for the university sector. Instead of focusing on maintaining the value of degrees by a rigorous external examination system, government policy has focused on student satisfaction (as measured by the National Student Survey).

Within the university, power has shifted from academics – in the university senate – to managers who simply do not have the same long-term commitment to academic work.

With UK higher education having just emerged from its biggest industrial action ever, we are starting to see the effects of this policy.

The pay of most university staff (if not that of vice-chancellors) has been subject to modest increases under the public-sector pay cap, yet while institutions have so far staved off unrest on this front, they faced a destructive industrial dispute with lecturers this year over pensions. University managements said that they could not afford even the substantially reduced defined-benefit pension system that had been put in place just a few years ago.

Is this posturing during an industrial dispute, or a revelation of the parlous state of university finance, despite the 50 per cent increase in per-student resource from the high fees imposed?

Many have pointed to the fact that some universities have taken on debt at 70 per cent or even more of income to fund massive building programmes. The use of “special purpose vehicles” in the complicated financing of student accommodation suggests that the real risk exposure of some universities might be significantly higher.

There are also warnings that the current relatively modest and temporary demographic downturn in the number of 18-year-olds might drive some universities into bankruptcy. Storm clouds of threatened redundancies of academics appear on the horizon.

In a two-year project, I worked with a team that combined economic modelling and data analysis with the insights of a former vice-chancellor and the managing partner of a US education sector private-equity firm. The results and policy proposals are in a forthcoming book, English Universities in Crisis: Markets without Competition.

Simply put, the problem is not that the government imposed markets on the sector, but rather that they were the wrong sorts of markets, which led to the wrong sort of competition. Instead of quality competition, we ended up with marketing.

Decision-making has to return to the “engineers” and be removed from the administrators and marketing professionals. It is lecturers on the coalface who know how to teach, because they have had to learn the hard way – facing 200 students in a first-year lecture focuses the mind.

There is that fine balance between keeping students interested in the material and even entertained, not for its own sake but because of the leeway it gives the best lecturers to really challenge students’ thinking.

This need to challenge – fundamental to a university – carries over to continuous assessment and final examinations. Challenging students may not lead to the highest teaching evaluations and NSS scores.

Given the windfall in per-student teaching resource with the increased fees, there was plenty of money to allow significant improvement in the estate while setting aside funds for a rainy day and still substantially lowering the student-to-staff ratio. That that did not happen represents a sector-wide failure of university governance.

We know, of course, what would happen in the car industry if we got rid of safety regulations, rules about fuel economy and pollution standards, and also scrapped the high taxation of petrol and the high reliability of imported vehicles. That is, if decision-making were taken away from the engineers and given to the marketing people.

Back in the 1950s, US auto companies competed to place massive tail fins on their cars. The fins were designed to give cars the sleek look of fighter jets and rocket ships, with the most famous example the 1959 Cadillac. But it was a stylistic conceit rather than engineering-driven. The pretend aeronautics beloved of marketing teams did not deliver better automobiles.

Just as with the competition over which car manufacturer could provide the biggest fins, most English universities have built lavish student centres, often disguised under the nomenclature of “library” but with remarkably few books.

We need more Harvard Yard and less Madison Avenue in our approach to higher education.

Jeff Frank is a professor of economics at Royal Holloway, University of London.

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